The Pr. Commissioner Of Income Tax -1, Nagpur v. Pankaj Chokhani, Nagpur

IN THE HIGH COURT OF JUDICATURE AT BOMBAYNAGPUR BENCH, NAGPUR. INCOME TAX APPEAL NO.09 OF 2020 The Pr. Commissioner of Income Tax -1, Nagpur -vs- Pankaj Chokhani, Nagpur, 544, Opp. D. N. College, Congress Nagar, Nagpur 440012 ---------------------------------------------------------------------------------------------------------------------------------Office notes, Office Memoranda ofCoram, appearances, Court's ordersCourt's or Judge's Orders.or directions and Registrar's orders. Shri Anand Parchure, Advocate for Appellant. CORAM : A. S. CHANDURKAR AND N. B. SURYAWANSHI, JJ.DATE : September 18, 2020 Hearing was conducted through Video Conferencing andthe learned counsel agreed that the audio and visual quality wasproper. 2.Heard Shri A. Parchure, learned counsel for the Revenue. 3.The Assessment Officer by his order dated 28/10/2016with regard to assessment year 2009-2010 found that therespondent-assessee had failed to disclose correct and trueinformation regarding short term capital loss on shares in hisIncome Tax Return. Amount of Rs.13,46,212/- was claimed asloss which was adjusted against business income. Thisaccording to the Assessment Officer was not permissible. Hetherefore initiated re-assessment proceedings under Section 148of the Income Tax Act, 1961 (for short, the said Act). Theassessee challenged that order by filing an appeal before theCommissioner of Income Tax (Appeals). In the appeal it wasfound that in the assessment proceedings under Section 143(3) of the said Act the share transactions had been verified. Merely on the basis of the Auditor’s report raising objections, noticeunder Section 148 of the said Act came to be issued. On findingthat except the Audit Objection there was no other materialbefore the Assessment Officer which could form the basis of“valid reason to believe”, the re-opening of the proceedings wasnot justified. It was also observed that actual share transactionstook place only on 13 days and for about 140 days the assesseewas trading in Derivatives. In view thereof it was found thatthe initiation of proceedings by the Assessment Officer was notpermissible. The Revenue then approached the Income TaxAppellate Tribunal which by the impugned order maintained theorder passed by the Commissioner of Income Tax (Appeals).Hence this appeal. 4.It is urged by the learned counsel for the Revenue thatre-assessment proceedings were not initiated merely becausethere was a change of opinion by the Assessment Officer.There was no reason to come to the conclusion that the exerciseundertaken by the Assessment Officer was merely on the basisof Audit objections and hence not justified. 5.On hearing the learned counsel for the Revenue we findthat the Commissioner of Income Tax (Appeals) has rightlyfound that except the Audit Objection there was no othermaterial to show that the assessee had withheld any materialinformation. The Assessment Officer has failed to refer to anysuch material which could be said to form the basis of a validreason to believe that the income of the assessee had escaped assessment. It is in this backdrop that even the Tribunal hasfound that the re-opening of the assessment was based merelyon change of opinion and this was not permissible. Referenceto CBDT Circular No.06/2016 in these facts was also justified. In the light of the aforesaid reasons which are borne fromthe record we find that the order passed by the AssessmentOfficer has been rightly set aside. No substantial question oflaw arises for adjudication. The Appeal is accordingly dismissed. JUDGE JUDGE